This paper is the first in a series of policy proposals intended reduce Australia’s budget deficit in a fairer and more equitable way than the measures rejected by the Senate.
With large parts of the 2014 budget not passed by the Senate, Prime Minister Tony Abbott has asked Senators for alternative ways to reduce the budget deficit. One alternative is a “Buffet rule” for Australia – named after billionaire investor Warren Buffett, who commented that his secretary should not pay a higher average rate of tax than he does.
This paper is the first in a series of policy proposals that would not only reduce Australia’s budget deficit, but do so in a fairer and more equitable way than the measures rejected by the Senate.
The idea of the Buffett rule is to charge a minimum average rate of tax on very high income households based on their total income. This applies to their income before they go through the process of making tax deductions. This would mean that if very high income households are able to make large deductions to reduce their taxable income to low levels they would still pay a reasonable amount of tax based on their total income.